LionGold to receive investment, relieving debt burden

CATALIST-LISTED LionGold Corp, one of the firms involved in the penny stock crash of 2013, is set to receive an investment to help with its outstanding debt, it announced in a Singapore Exchange filing on Friday evening.

Under a subscription agreement on Dec 28, Yaoo Capital Pte Ltd will subscribe for up to 21.8 billion new ordinary shares in LionGold at the issue price of 0.1 Singapore cent each, equal to the volume weighted average price of LionGold's shares on Dec 28.

Yaoo Capital's two directors and shareholders, Yao Liang and Yao Yuan, are private investors from China with investment interests in Asia. Said LionGold: "The subscriber, its shareholders and directors are of the view that there is untapped and discoverable potential in the group’s core gold mining project in Ballarat, Australia." They intend to assess the situation after the subscription agreement is completed, with a view to strengthening the group's core business activity, while also looking at other areas of growth.

Yaoo Capital will subscribe for the shares for an aggregate consideration equal to the outstanding principal amount and accumulated interest that LionGold owes under a debt restructuring agreement dated June 29, 2017, as of the completion date of the subscription.

As the consideration will be fully set off against the outstanding amount of debt, there will be no proceeds raised from the subscription.

Under the debt restructuring agreement between LionGold, creditor Premier Equity Sub Fund D, and manager Value Capital Asset Management, LionGold was to repay its outstanding amount within five years from the agreement's date. Subject to the terms and conditions of a deed of assignment to be entered into, Yaoo Capital intends to take on all the rights and obligations of the creditor and manager.

With the completion of the subscription agreement, as the consideration is fully set off against the outstanding debt, LionGold will be deemed to have repaid the debt and Yaoo Capital will fully release and discharge LionGold from its payment obligations under the debt restructuring agreement, with said agreement then terminated.

Assuming that the maximum number of shares are issued, the subscription shares will represent 71.5 per cent of the enlarged issued and paid-up share capital of LionGold after the subscription, resulting in a transfer of controlling interest to Yaoo Capital. LionGold will therefore be seeking shareholders’ approval for, among other things, the allotment and issuance of the subscription shares and the transfer of controlling interest as a result.

Completion of the subscription is also conditional upon several factors, including the obtaining of a whitewash waiver from the Securities Industry Council. LionGold will be convening a special general meeting to seek shareholder approval for the subscription and the whitewash waiver. A circular with further information and the notice to convene the meeting will be sent to shareholders in due course.

Janice Heng

29 December 2018